Here, we investigated how HCV-infection of hepatoma cells affects the response of innate immune cells, namely NK cells. As an experimental model we used hepatoma cell cultures that were either infected with the genotype 2a Japanese fulminant hepatitis-1 strain or transduced with luciferase-tagged subgenomic HCV replicons. HCV infection of hepatoma cells was found to attenuate IFN-induced expression of MHC class I. This was associated with replicating HCV RNA, and not with viral protein expression. HCV infection reduced IFN-induced synthesis of MHC class I protein and induced phosphorylation of PKR and eIF2&#945;. IFN-induced MHC class I expression was restored by small hairpin RNA-mediated knockdown of PKR in HCV-infected cells. Co-culture of HCV-specific CD8+T cells and HCV-infected cells that expressed HLA-A2 demonstrated that HCV infection reduced the effector functions of HCV-specific CD8+ T cells; these functions were restored by small hairpin RNA-mediated knockdown of PKR. Downregulation of MHC class I expression should result in increased stimulation of NK cells. However, production of interferon (IFN)&#947; by natural killer (NK) cells is typically attenuated in patients with chronic HCV infection compared to those of uninfected controls. To investigate whether this is due to effects of additional cell populations, we cultured hepatoma cells that express luciferase-tagged subgenomic HCV replicons (Huh7/HCV replicon cells) or their HCV-negative counterparts (Huh7), with NK cells in the presence or absence of other populations of PBMC. Antiviral activity, cytotoxicity, and cytokine production were assessed. We found that NK cells produced greater amounts of IFN&#947; when exposed to PBMC co-cultured with Huh7/HCV replicon cells than with Huh7 cells. In addition, NK cells and PBMC from controls suppressed HCV replication to a greater extent than those from patients with chronic HCV infection. This antiviral effect was predominantly mediated by tumor necrosis factor (TNF)&#945; and IFN&#947;. The antiviral activity of NK cells and their production of IFN&#947; were reduced when they were used in co-culture alone (rather than with PBMC), after depletion of CD14+ monocytes, following knockdown of the inflammasome in monocytes, or after neutralization of interleukin (IL)-18, which is regulated by the inflammasome. These findings indicate a role for monocytes in NK cell activation. Compared with control monocytes, monocytes from patients with chronic HCV infection had reduced TNF&#945;-mediated (direct) and reduced NK-cell mediated (indirect) antiviral effects. Control monocytes increased the antiviral effects of NK cells from patients with chronic HCV infection and their production of IFN&#947;. Thus, patients with chronic HCV infection appear to have reduced monocyte function, which attenuates IFN&#947; responses of NK cells.